SAN FRANCISCO — A Superior Court judge on Thursday overturned San Francisco's landmark video display terminal safety ordinance, the only law in the United States that required private companies to protect workers from the muscle-straining dangers of VDT work by providing rest breaks and properly designed office furniture.

Judge Lucy Kelly McCabe, ruling in favor of two small data processing companies, held that California's 1973 Occupational Safety and Health Act preempted the San Francisco ordinance, which required periodic rest breaks and properly designed office furniture for anyone who spent four hours a day or more at a VDT.

The ruling left business representatives greatly relieved and worker safety advocates bitterly disappointed.

Proponents had agreed in 1990 to significantly weaken the law in order to quell opposition from major business interests, which warned that the law might cost them tens of millions of dollars. The coalition of unions and work-safety groups that lobbied for years to pass the law contended that the notion of state preemption was irrelevant because the state's Division of Occupational Safety and Health (Cal/OSHA) has for years resisted any regulation of VDTs.

Both the city and other groups that supported the law are expected to appeal Thursday's ruling.

Los Angeles city officials, considering their own VDT law, have been warned by the city attorney's office that state preemption would likely kill it.

San Francisco's law was watched carefully by health and business experts concerned with the mounting problem of "repetitive strain" illnesses that have plagued workers and employers during the past decade as the use of VDTs and other computerized devices speeded up the pace of labor in offices and factories.

An article in Tuesday's Journal of the American Medical Assn. said workplace repetitive strain illnesses are rising at an alarming rate and will continue to jeopardize a broad spectrum of workers until businesses and the medical community respond.

Cases of occupational illnesses due to repetitive strain increased from 45,000 in 1986 to 185,000 in 1990, the most recent year for which federal data is available. Among American office workers, the rate of those illnesses more than doubled between 1989 and 1990.

Both the federal Occupational Safety and Health Administration and Cal/OSHA are in the early stages of developing regulations that would force employers to be more sensitive to the science of ergonomics--the chairs, tables and tools and body posture a worker uses. However, sluggishness by both agencies during the past several years encouraged municipalities such as San Francisco to pass their own laws. A similar law passed in Suffolk County, N.Y., was overturned in court several years ago.

In opposing the San Francisco law, businesses argued that they should not have to adjust to a variety of such laws in various jurisdictions, and called for uniform state or federal standards.

Seth J. Gersch, managing director of Montgomery Securities, a San Francisco brokerage firm, said Thursday that the city's ordinance "placed San Francisco in a poor light" with businesses and threatened to drive away national companies that otherwise might consider the city as a base. The city, known for its slow-growth provisions, steep office rents and high taxes, is already widely viewed as being anti-business.

The law applied to businesses with 15 or more employees. Employers were required to provide adjustable chairs and video terminals with detachable keyboards. In addition, workers were to be given 15-minute breaks or be transferred to other work for 15 minutes after every two hours of work on a computer terminal.

To lessen the opposition of the business community, compliance with the ordinance was to be staggered.

The first phase, which took effect less than three weeks ago, required newly purchased equipment to meet ergonomic standards. Beginning in mid-1993, employers would have been required to spend up to $250 per existing workstation to comply with the standards. Full compliance would have been required by 1995.

While major businesses appeared pacified, two smaller firms, C&T Management Services Inc. and Zack Electronics Inc., sued the city last fall. Larger firms, including IBM, helped pay the plaintiffs' legal fees.

Work-safety advocates said they now hope to move the fight over VDT regulations out of the courtroom by supporting a bill in the Legislature that would impose statewide standards similar to the San Francisco ordinance.

The bill, authored by Assemblyman Tom Hayden (D-Santa Monica), has passed the Assembly and is awaiting a Senate floor vote. However, if passed it would likely face a veto by Republican Gov. Pete Wilson, who has often railed against legislation that increases the costs of California businesses.